M/S Indian Oil Corporation Ltd vs Commissioner Of Central Excise, Raigad

Application No. E/Extn/92981/15 in Appeal No. E/85285/14

(Arising out of Order-in-Appeal No. 87/MAK(87)/COMMR/RGD/13-14 dated 24.10.2013 passed by the Commissioner of Central Excise (Appeals), Raigad).

For approval and signature:

Honble Shri Anil Choudhary, Member (Judicial)

======================================================

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? ======================================================

M/s Indian Oil Corporation Ltd. Appellant

Vs.

Commissioner of Central Excise, Raigad Respondent

Appearance: Ms. Padmavati Patil, Advocate for Appellant

Shri H.M. Dixit, AC (AR) for Respondent

CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing: 06.04.2015

Date of Decision: 06.04.2015

ORDER NO.

Per: Shri Anil Choudhary

The appellant, M/s Indian Oil Corporation Ltd., is in appeal against Order-in-Appeal No. 87/MAK(87)/COMMR/RGD/13-14 dated 24.10.2013 passed by the Commissioner of Central Excise (Appeals), Raigad.

2. The issue involves in this appeal is whether penalty under Section 11AC has been rightly imposed on the appellant in the fact that due to change in the warehousing provisions w.e.f. 6.9.2004 vide Notification No. 17/04-CE, the appellants are having certain quantity of stock in the warehouse, which was declared to the department on 6.9.2004 itself. The appellant had paid a total amount of Rs.4,39,35,250/- as BED along with Edu. Cess totaling Rs.4,48,38,955/-. This duty was paid on 5.10.2004 vide debit in PLA under intimation to the Revenue. Thereafter show-cause notice dated 4.10.2005 was issued on the allegation that since the warehouse was no longer the place of storage under Rule 220 of Central Excise Rules, 2002 w.e.f. midnight of 5/6 Sept., 2004 for petroleum products, the appellant should have paid appropriate duty on the entire bonded stock of petroleum products lying in their premises on such date. In the earlier round of litigation, the matter has reached before this Tribunal in Appeal No. E/3320 and 3321/06-Mum vide order dated 26.4.2013, this Tribunal observed as follows: -

3. We find that the duty stands confirmed against the appellant in both the appeals for the period 5th/6th September 2004 when the warehousing facility was withdrawn vide Notification No. 17/2004-CE (NT) dt. 4.9.2004. In one of the appeal the benefit of Notification No.64/95-CE dt. 16.3.1995 has not been extended to the warehoused goods cleared to Indian Navy in respect of the stock held as on 5th/6th September 2004. In the second appeal the benefit of Notification No. 22/2003-CE dt. 31.3.2003 have not been extended to the warehoused goods cleared to 100% EOU in respect of the stock on the date of the warehousing facility is withdrawn.

4. We find that these issues are decided by the Tribunal in favour of the appellants own case in Appeal No. E/405/2006 Final Order dt. 21.8.2007 and the same has been upheld by the Honble Gujarat High Court vide order dt. 18.4.2012 in Tax Appeal No. 435/2008.

5. In view of the above decision, the benefit of Notification No.64/95-CE is available in respect of the warehoused goods cleared to Indian Nevy. Hence, in this regard the demand is not sustainable.

6. In respect of the goods cleared to 100% EOU the issue is also covered by the decision of the Tribunal in the case of India Oil Corporation Ltd. reported in 2008 (230) ELT 177 (Tri.) and the same has been upheld by the Honble Madras High Court in the Case of Commissioner Vs. India Oil Corporation Ltd. 2009 (237) ELT A103 (Mad.). In view of the above decision, the demand is in respect of warehoused goods supplied to Indian Navy and EOU is not sustainable. Hence it is set aside.

7. In respect of part of the demand, pertaining to the value of the goods cleared from depot at a higher price than the price on which duty is paid at the time of clearance from warehouse and in respect of the shortage, we find that the committee on dispute had not given permission to pursue these demands confirmed on these grounds. From the record, we find that the duty has not been quantified on the ground of valuation and shortage. Therefore, in this regard, the matter is remanded back to the adjudicating authority to quantify the demand on the issue of valuation as well as on shortage and to decide the issue of penalty afresh after affording an opportunity of hearing to the appellants. The appeals are disposed of as indicated above.

3. Pursuant to remand on the limited issue that the differential duty was not quantified and as regards the penalty was excisible the adjudicating authority in the impugned order in respect of duty amounting to Rs.77,033/- not paid on unaccounted quantity of 39.66KL of furnace oil found short, if the shortage is within the permissible limit and therefore, dropped the demand of the same. Further, as regards he differential duty amounting to Rs.27,53,567/- being duty allegedly short paid on 19679.54 KL of furnace oil cleared by adopting the ex-factory price at Rs.11044.245/KL as against the depot price of Rs.11901.60/KL. The Commissioner has observed as follows: -

I find that the assessee has declared their prices for sale of furnace oil as Rs.11901.60/KL and Rs.11762.60/KL if sold from Maharashtra within Municipal Limit and outside Municipal limit respectively. The assessee falls outside the Municipal limit. Therefore, the price applicable for them shall be Rs.11762.60/KL for charging and payment of Central Excise duty whereas in the show-cause notice the demand of Central Excise duty has been worked out by applying the price of Rs.11901.60/KL which is not proper as the same is meant for sale of furnace oil within Municipal limit. Therefore, correct price for charging Central Excise duty on 19679.54 and 5051.766 KL of furnace oil should have been @ 11762.60/KL. Accordingly, by adopting a price of Rs.11762.60/KL the differential Central Excise duty liable to be recovered on the quantity of Rs.19679.54 and 5051.766KL of furnace oil works out to be Rs.26,61,654/-. The assessee has already paid Rs.26,61,654/- vide challan dated 29.3.2008 against liability of Rs.26,61,654/- and hence the same needs to be appropriated.

3.1 Further on the question of penalty, it has been observed that even non-observance of procedural condition is not to be condoned if it is likely to facilitate commission of fraud or introduce administrative inconvenience and accordingly, the learned Commissioner has held the appellant liable to penalty and imposed a penalty of Rs.26,61,654/- under Rule 25 of Central Excise Rules read with Section 11AC of the Act along with interest under Section 11AB.

4. The learned Counsel for the appellant urges that the matter is wholly interpretational in nature and the whole issue was in the knowledge of the Revenue. The appellant immediately on withdrawal of warehousing permission informed the Revenue regarding the stocks lying in the warehouse and also deposited the duty immediately. Whatever differential duty have subsequently been demanded is matter of interpretation whether the duty was payable on ex-factory price as warehouse was no long the place of removal and/or the duty was payable at the warehouse price on the date of withdrawal. In this view of the matter, there is no contumacious conduct and/or any concealment on part of the appellant and imposition of penalty is bad in law and facts and the same is fit to be set aside.

5. The learned AR relies on the impugned order.

6. Having considered the rival contentions, I find that the issue as to differential duty has been arisen in the facts of this case as a matter of interpretational issue. There is no concealment or contumacious conduct on part of the appellant found by the Revenue. Accordingly, the penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 is set aside. The appellant shall be liable to pay interest as held in the impugned order under Section 11AB and shall deposit the same, if not paid so far.

7. Thus, the appeal is allowed with consequential benefit, if any, in accordance with law.

(Dictated and pronounced in Court)

(Anil Choudhary) Member (Judicial)

Sinha

1